EU unveils its banking plans and watchdog

City A.M. Reporter
THE European Union yesterday unveiled its blueprint for an overhaul of the way banks and financial markets are policed, a central plank in new rules designed to prevent a repeat of the global economic crisis.<br /><br />It plans to create a banking super-watchdog, with powers to overrule countries such as Britain, and a pan-European supervisor that would warn of early signs of crisis.<br /><br />&ldquo;Our aim is to protect European taxpayers from a repeat of the dark days of autumn 2008, when governments had to pour billions of euros into the banks,&rdquo; European Commission President Jose Manuel Barroso said.<br /><br />&ldquo;The European system can also inspire a global one and we will argue for that in Pittsburgh,&rdquo; he added, referring to the meeting of large G20 nations which starts today.<br /><br />The laws, which include the creation of a separate supervisor for insurers and markets, are set to give more say than ever to European institutions as Brussels tightens its grip on an industry blamed by many for triggering the economic slump.<br /><br />The blueprint, broadly agreed on by EU leaders earlier this year, could erode the authority of Britain, which is fighting to keep control over the City &ndash; the centrepiece of its economy. <br /><br />Financial services minister Paul Myners signalled that the new watchdogs should not be given more power than was foreseen in June, when Britain and other EU countries agreed to establish the new supervisors.<br /><br />There is widespread scepticism in Britain about the raft of fresh financial rules that many there see as a German-Franco bid to undermine the City, Europe&rsquo;s largest financial centre.<br /><br />&ldquo;The UK&rsquo;s concern about the competitiveness of the City is legitimate,&rdquo; said Simon Tilford, chief economist with think-tank the Centre for European Reform.